Top-Rated Stocks That Treat Shareholders Right

The flipside to shareholder-friendly stocks expected to underperform the market? Highfliers that pay little heed to their owners' interests. But don't forget the top-flight companies that also treat their shareholders with respect.

Institutional Shareholder Services -- the big name in corporate proxies -- measures how well a company performs in as many as 63 categories, covering four broad areas. Each company is scored relative to its market index and its industry group. It assigns the stocks a rating that it calls Corporate Governance Quotient, or CGQ.

Some evidence supports the notion that companies with weaker governance have higher risk, decreased profitability, and lower valuations. We'll be looking at stocks that Motley Fool CAPS investors have marked to outperform the market and also sport above-average CGQ scores, either in their index group or among industry peers.

Company	CAPS Rating (out of 5)	Index CGQ Ranking^	Industry CGQ Ranking^
Chart Industries (Nasdaq: GTLS)	****	90.4%	79.7%
CIGNA (NYSE: CI)	****	88.8%	99.0%
Macquarie Infrastructure (NYSE: MIC)	****	92.1%	67.9%
Unum Group (NYSE: UNM)	****	80.2%	97.6%
VeriFone (NYSE: PAY)	****	88.8%	87.1%

Source: Yahoo! Finance, Motley Fool CAPS.
^ Relative placement when compared to companies in index or industry. Higher is better.

Although finding good companies and holding them for the long term is one of the greatest secrets to investing, there are many factors that an investor should consider, and how well a company treats shareholders shouldn't be least among them. View these rankings as a way to gauge how these businesses stack up against one another relative to their shareholder policies.

Go to the head of the class
As oil consumption drops globally, the desire for exploration and production companies to find additional reserves is depressed. It would seem that oil and gas equipment manufacturer Chart Industries, which counts the likes of ExxonMobil (NYSE: XOM) and ConocoPhillips (NYSE: COP) as two of its largest customers, is in an unenviable situation. But because its specialty is cryogenic and low-temperature production and storage, which is essential in the global liquid supply chain, it continues to see growth.

Top-rated CAPS All-Star Cmoor admits that management made poor choices in cash management previously, but finds this industry leader to have a dirt cheap valuation:

World leader in supplying equipment and systems for companies liquifying, transporting and using liquid natural gas (LNG). Intensified push for greener environment in the US will continue to increase use of LNG in closed loop auto and truck fleets, power generation and other uses. Dirt cheap P/E and PEG, and a management chastened by earlier failure to manage cash make this a good bet [to] get through this downturn and be ready to grow rapidly when irrational fear subsides.

Declining markets have also shaken up health insurer Cigna, which keeps guiding higher and higher for expected losses from its variable-annuities products -- a discontinued line it no longer sells or markets. The original estimate had been for $125 million in losses, but that grew to $165 million last month and now is expected to be $175 million. CAPS All-Star tenmiles thinks the situation is manageable:

Re-entering long on CIGNA; believe variable annuity business is manageable while health care and overall pension business remains attractive for the longer-term

A Foolish quotient
Many factors go into whether a stock is a buy or sell, but do corporate governance policies enter into your equation? It pays to start your own research on these stocks on Motley Fool CAPS. Read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made -- all from a stock's CAPS page.